The long term objective of the work proposed here is to understand the factors that specify cell fates, both differentiation and patterning, in early vertebrate development. Special attention is given to the induction of neural tissue. Recently, it has been shown that peptide growth factors act as morphogens or determinants in that they change the fates of cells from ectodermal to mesodermal pathways during early Xenopus development. Two embryonic peptide growth factors, fibroblast growth factor and the Vgl protein, are involved in mesoderm induction. It is also known that at least one other factor is needed to account for all the mesodermal cell types that are formed. This other factor is likely to be a member of he transforming growth factor beta family and may be the inducing factor secreted from XTC cells, XTC-MIF. We have now cloned several new members of the TGFbeta gene family, in Xenopus, one of which may be the XTC-MIF gene. We propose to study the expression these new TGFbeta genes in early development and determine their roles in mesodermal and/or neural induction. A second major aspect of the proposal stems from our discovery of a neural inducing factor. This factor, secreted from a murine macrophage cell line, induces neural tissue in isolated Xenopus ectodermal cells that would otherwise form only ciliated epidermis. Animal caps treated with PIF organize the induced dorsal CNS and mesodermal tissues into a clear axis with antero-posterior polarity. Taken together, these findings suggest that PIF has many of the properties associated with a Spemann organizer. We propose to purify the PIF protein, clone the gene encoding its Xenopus homologue and study the function and expression of this novel neural inducing factor.